Without using graphs or tables. Suppose we want to buy a house. We find a 30-yea

Question

Without using graphs or tables. Suppose we want to buy a house. We find a 30-year fixed rate loan at 4% APR compounded monthly from our local bank. We pay a down payment, and the amount we need to mortgage is $150,000.
a. What will our monthly payment need to be? b. How much do we pay in total for our $150,000 mortgage?
Without using graphs or tables. Using the same context above, suppose we can only afford a monthly payment (ignore taxes, etc) of $500.
a. How much money can we afford to mortgage on this budget? b. Assuming we put a 20% down payment resulting in the mortgage amount from part (a), what was the sale price of our house? Without using graphs or tables. Suppose we want to buy a house. We find a 30-year fixed rate loan at 4% APR compounded monthly from our local bank. We pay a down payment, and the amount we need to mortgage is $150,000.
a. What will our monthly payment need to be? b. How much do we pay in total for our $150,000 mortgage?
Without using graphs or tables. Using the same context above, suppose we can only afford a monthly payment (ignore taxes, etc) of $500.
a. How much money can we afford to mortgage on this budget? b. Assuming we put a 20% down payment resulting in the mortgage amount from part (a), what was the sale price of our house?
a. What will our monthly payment need to be? b. How much do we pay in total for our $150,000 mortgage?
Without using graphs or tables. Using the same context above, suppose we can only afford a monthly payment (ignore taxes, etc) of $500.
a. How much money can we afford to mortgage on this budget? b. Assuming we put a 20% down payment resulting in the mortgage amount from part (a), what was the sale price of our house?

Explanation / Answer

a) M= P* i/(1-(1+i)-n

P= 150000

i= 0.04/12

= 0.0033

n=30*12

= 360

M= 150000* [0.0033/(1-(1+0.0033)-360]

= 150000* 0.0047

= 719.866$

b)Total we have to pay 719.866* 360

i.e 259151.76$

c) M= P* i/(1-(1+i)-n

now M=500 and we have to find P

500= P* [0.0033/(1-(1+0.0033)-360

500= P*0.0047

P= 500/0.0047

= 106382.97

i.e we can afford to pay 106383$

d) Let x be the sale price of our house, then

0.20x+150000=x

150000= 0.8x

x= 187500

sale price of house is $187500

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